TMI Blog2012 (11) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... e capricious but should have a reasonable nexus to the available material and circumstances of the case - If the additions, as made by the AO are compared with the turnover of the assessee, the income of the assessee comes at 40.32% which is almost 4 to 5 times of the income shown in the past and also in the case of other contractors. Therefore, the assessment made by the AO is not based on the facts but an arbitrary assessment. - Deletion of addition by CIT(A) confirmed - Decided in favor of assessee. Addition made on account of bogus purchases of materiaL – Held that:- the AO was not justified in making specific addition without giving any opportunity to the assessee - no infirmity in the order of CIT(A) in this regard - C.O. of the assessee, the same is supportive in nature and therefore, did not require any adjudication and the same is dismissed accordingly - In the result, the appeal of the Revenue is partly allowed and C.O. of the assessee is dismissed. - I.T.A. No.371(Asr)/2010, C.O. No.29(Asr)/2010 - - - Dated:- 26-7-2012 - SH. H.S. SIDHU AND SH. B.P.JAIN, JJ. Department by: Sh. Tarsem Lal, DR Assessee by: Sh. P.N.Arora, Advocate ORDER PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account and has also not estimated the income under section 143(3) and made specific addition in the discrepancies noticed by him. Therefore, the facts of the cases relied on by the learned counsel for the assessee are not relevant to the facts of the present case. In the present case, the A.O. has not rejected the books of account of the assessee and made the addition only on the basis of non-production of evidence supporting the claim of the assessee and he made addition on the basis of evidence of non-verifiable purchases made by the assessee. The learned first appellate authority has not given any finding on the addition of Rs.1,43,33,248/- on account of unverifiable credits shown as a labour and wages payable without appreciation of facts that the assessee has not filed any evidence supporting its claim. As we have reproduced above the findings of the learned first appellate authority, we are of the view that the impugned order is a non-speaking order on the grounds raised by the department as mentioned above. Therefore, the impugned order is not sustainable in the eye of law. We are directing the learned first appellate authority to adjudicate the grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure for selection of cases for scrutiny for non-corporate assessees, which is available in assessee s paper book at pages 88 to 90. It was read by the ld. DCIT(DR) that the said procedure for selection of cases for scrutiny is for the cases to be taken for scrutiny during the financial year 2005-06. Obviously, the cases to be taken for scrutiny during the financial year 2005-06 will pertain to the years preceding to financial year 2005-06 whereas the impugned year before us is financial year 2005-06 relevant to assessment year 2006-07 and therefore, this procedure relied upon by the assesseebefore the ld. CIT(A) is not for the year in dispute, therefore, the ld. CIT(A) has erred in deciding this issue in favour of the assessee. It was also argued by the Ld. DCIT(DR), Mr. Tarsem Lal that since the matter has been set aside to the file of the ld. CIT(A) by the ITAT, Amritsar Bench, to adjudicate the matter afresh under law after giving an opportunity to the assessee and in the set aside matter, there was no issue with respect to the jurisdiction and the ld. CIT(A) was not justified in deciding the jurisdictional issue. 4. The Ld. counsel for the assessee, Mr. P.N.Arora, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation and details of the assessee, the assessee was again asked to produce muster rolls, attendance register and other details with respect to wages and salary which were not produced. The AO after allowing one month wages out of total wages payable of Rs.1,66,22,660/- disallowed Rs.1,43,33,248/- and added to the income of the assessee. Accordingly, the AO also made a disallowance of Rs.68,000/- as unexplained credit on account of salary payable. 7. The Ld. CIT(A) in view of the direction of the ITAT, Amritsar Bench and accepting the explanation of the assessee, allowed the claim of the assessee and deleted the addition made by the A.O. 8. We have heard the rival contentions and perused the facts of the case. There is no dispute to the fact that the assessee has not submitted the details of the labour to whom wages are payable as at the close of the year. During the year, as held by the ld. CIT(A), the assessee had made total payments of Rs.1,08,50,290/- on account of wages. As at 31.03.2005, the amount of wages was payable at Rs.1,40,25,660/-. Even if during the impugned year, no wages pertaining to this year have been paid and entire payment of Rs.1,08,50,290/- was in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctee. If the assessee does not have the capital or has the minimum capital and the assessee is also managing his affairs with the net minimum capital of Rs. 2 lacs approximately, then there should not be any objection and the department can not sit over the chair of the business person. Therefore, the arguments of the Ld. DR in this regard are rejected. The AO in the following year i.e. assessment year 2007-08 has applied N.P. rate of 8% on contract receipts after invoking the provisions of section 145(3) of the Act, wherein the outstanding wages are payable at Rs.85,39,110/- as at 31.03.2007. Therefore, we find no infirmity in the order of the Ld. CIT(A), who has rightly deleted the addition made by the A.O. Similarly, findings of the ld. CIT(A) on the deletion of addition of Rs.68,000/- on account of salary payable is justified. We find no infirmity in his order and hence, the same is upheld. 9. As regards ground relate to the addition made on account of bogus purchases of material, we concur with the views of the ld. CIT(A) in this regard that the AO has made the addition without giving an opportunity to the assessee when the AO had given a show cause to estimate the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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